Markets & Finance

Analyst Actions: Wynn Resorts, Amkor, Emulex

Oppenheimer analyst David Katz says Wynn Resorts' (WYNN) pre-announced second quarter results are lower than expected in Las Vegas ($80-$84 million, vs. his prior $96.1 million estimate), better than expected in Macau ($152-$158 million vs. his $111.2 million forecast). The result is a net positive effect on his corporate EPS estimates, which rise to $3.25 from $3.00 for 2008, to $3.33 from $3.20 for 2009.

Still, Katz feels a neutral stance is appropriate on WYNN, given the uncertainty in the Las Vegas market and the prospective volatility in results. He says, while management's indications of confidence in the stock near term and the strong Macau results are encouraging, he believes the market remains broadly conservative on casino stocks. He keeps a perform rating on the shares.

Arcuri notes the company did not issue updated EPS, margin guidance, but he estimates the $25 million shortfall in revenues will equal about 150-basis point shortfall in gross margins and about $0.05 impact to EPS, meaning Street EPS estimate of $0.30 for second quarter remains too high.

While AMKR attributes the miss to enterprise resource planning issues it highlighted in late May, he believes weakening demand is playing - and will continue to play - a part. Despite the 30% pullback in the stock in the past two months, would continue to sell stock even down on this news as he feels it is going to go lower from here. He has an 8 price target on the stock.

BAIRD DOWNGRADES EMULEX TO NEUTRAL FROM OUTPERFORM

Baird analyst Jayson Noland says Emulex (ELX) preannounced $111-$113 million fourth quarter revenue and $0.19-$0.20 non-GAAP EPS guidance due to much weaker than expected embedded product revenue and lower-than-anticipated HBA performance. He says he downgrades until visibility or a more obvious catalyst appears.

In the near-term, Noland believes ELX fundamentals will likely continue to suffer from overexposure to high-end systems and underexposure to currently strong categories such as blade servers. He believes the valuation likely limits further downside in the shares at current levels.